Our take on the USD/JPY pair.

Weekly Timeframe: From a technical perspective, the weekly timeframe shows very little change. Price still remains to be trading between a weekly Quasimodo resistance level coming in at 122.18, and a major weekly swap level seen at 115.50.

Daily Timeframe: Last week saw rather cramped trading conditions as the buyers and sellers battled for position between a daily swap area coming in at 119.19-118.04, and a small daily supply area seen above at 120.63-119.88 (lowest zone within a stacked supply formation).

4hr Timeframe: The 4hr timeframe shows some very interesting price action. As we can all see, price is still currently seen trading within the confines of a 4hr descending channel (limits can be found at: 120.73 – 02/01/15...118.85 – 30/12/14) at the moment.

The sell-off seen on Friday saw the market hit what we like to call ‘fresh unfilled buy orders’ seen marked with a green arrow around the 118.38 mark. This will likely cause the market to rally higher today up to around 119.00, which in our opinion is a nice place to look for confirmed selling opportunities since it lines up nicely with the upper limits of the 4hr descending channel (tentative sell orders are seen just below at 118.97). Assuming that the sellers can hold the market lower here, we then expect to see price decline down towards 118.00, where a rebound could well be seen. However, with (what we like to call) a ‘hot point’ (essentially meaning a highly confluent area) lurking just below (for details, see numbers 1-5), we feel there’s a good chance that 118.00 will be breached and price will trade into this supportive area.

We are going to be setting a pending buy order at 117.35 within this ‘hot point’ with a stop just below at 116.73 for the following reasons:

1. Lower-limit support from the aforementioned descending channel.
2. Fresh 4hr decision-point demand area seen at 116.80-117.30.
3. 4hr Quasimodo support level at 117.43.
4. Psychological number 117.00
5. Trendline support from the low 113.15 – 04/11/14.